Franklin and Ondo push tokenized ETFs globally, aiming to bridge traditional finance with DeFi and expand investor access.
Franklin Templeton is stepping deeper into tokenized finance through a partnership with Ondo Finance. The firms plan to offer tokenized versions of selected Franklin ETFs that trade around the clock using crypto wallets. As reported, the design aims to let investors access fund exposure without brokerage accounts or traditional market hours.
Ondo to Tokenize Franklin ETFs, Opening DeFi Access to Traditional Assets
The initial rollout will cover regions including Europe, Asia-Pacific, the Middle East, and Latin America. Franklin said US availability depends on additional regulatory clarity about how third parties can distribute registered funds on-chain. The partners will start with a set of five funds spanning US equities, fixed income, and gold.
Bloomberg reported that Ondo will buy shares of the Franklin ETFs as part of the arrangement. It will then issue corresponding tokens through a special-purpose vehicle that passes through the economic exposure to token holders.
Investors hold rights to the return stream rather than direct ownership of the underlying ETF shares. Franklin and Ondo say this setup helps the tokens move into collateral use cases and decentralized finance applications that registered fund shares typically cannot.
Ondo’s market makers will provide token liquidity, including during periods when stock and bond markets are closed. The initiative targets crypto-native investors who use wallets and stablecoins and may never interact with brokerages. Franklin Templeton’s innovation leadership framed the effort as a new distribution channel for fund products.
Wall Street Eyes Tokenization as Path to Modernize Traditional Asset Access
Sandy Kaul, Franklin’s head of innovation, said the ETFs offer a mix of different exposures and serve as a test case for demand from this audience. Franklin already delivers international versions of its US strategies through conventional channels, but those require brokerage access.
The tokenized products remove that requirement, which may matter for investors lacking cross-border brokerage infrastructure to buy a US-listed ETF.
More so, the tokenization process converts traditional assets, including stocks and bonds, into blockchain tokens that represent ownership rights or economic exposure.
Wall Street firms have increasingly focused on this approach as a modernization pathway and a way to attract crypto-native participants. Still, growth remains limited compared with the much larger ETF and mutual fund market.
Ondo Warns U.S. Could Lose Edge as Tokenized Asset Market Expands Rapidly
According to rwa.xyz, tokenized real-world assets grew about 360% since 2025 to $26.5 billion. Adoption in the United States has lagged, partly due to regulatory uncertainty around tokenized ETFs.
Ian De Bode, president of Ondo Finance, said the US risks falling behind other jurisdictions without clearer guardrails. He also called the addressable market “meaningful,” citing millions of potential users.
Market participants also point to structural hurdles. Traditional ETF operations rely on broker-dealers and authorized participants who create and redeem shares. Tokenized products must also comply with securities laws while supporting non-KYC wallet usage, which can complicate governance and settlement.
Supporters argue tokenized ETFs could reduce settlement risk through faster settlement and lower counterparty exposure. They also expect improved capital efficiency, since assets may be reused more easily as collateral.
Franklin Templeton and Ondo’s effort comes as other major players pursue similar paths, including announced plans by BlackRock and WisdomTree to tokenize ETFs in the US. The New York Stock Exchange has also partnered with Securitize, while Nasdaq joined with Talos to connect crypto trading and risk tools.
